Investing

Waves of Secondary Offerings Piling into Market Strength (DRTX, INFI, RLGY, RXN, SGYP, TRNX, CYCC, DG, APO)

What is one trend you see whenever the stock market hits a new high or enjoys a long period of strength? Usually, companies and their insiders line up in droves to sell stock to raise capital for the company or to lock in big gains for their management teams and prior financial backers. Now that the Dow Jones Industrial Average hit 14,700, we are seeing many secondary offerings hit the market.

If you tally up just the common stock that could be sold from these offerings, it comes to a staggering $3.6 billion in new stock that will hit the market.

Durata Therapeutics Inc. (NASDAQ: DRTX) filed to sell up to $50 million worth of common stock, or $69 million if an overallotment option is used in full. BofA/Merrill Lynch, Credit Suisse and Jefferies will lead the offering. Durata is still a new company, and its market cap is only $154 million. The company plans to use the proceeds for drug research and development, as well as to seek marketing approvals in America and Europe.

Infinity Pharmaceuticals Inc. (NASDAQ: INFI) is going to sell 8.5 million shares of common stock, but all shares are being sold by backers rather than the company. After a 4% drop to $44.50, this is close to $380 million in gross proceeds.

Realogy Holdings Corp. (NYSE: RLGY) is down about 4% at $43.00 after filing to sell some 35 million shares. If you want to know what a large secondary is, this is some $1.5 billion in proceeds. All shares are being sold by prior holders tied to Apollo Global Management LLC (NYSE: APO) and others.

Rexnord Corp. (NYSE: RXN) filed to sell 67,941,189 shares, and all the stock is being sold by insiders. With shares down about 3% at $19.15, this is worth about $1.3 billion, and most of the shares are being sold by Apollo Global Management LLC (NYSE: APO). The market cap is about $1.9 billion, according to Yahoo! Finance.

Synergy Pharmaceuticals Inc. (NASDAQ: SGYP) said that it would sell up to $90 million in common stock, and this will all be used to fund drug R&D and its pipeline.

Tornier N.V. (NASDAQ: TRNX) filed to sell up to 8 million ordinary shares, which was listed as up to $200 million in new capital raised. This medical device company is down 1% at $18.69 on the report, and we would caution that the filing allows the sale of warrants, units and debt as well. The share sale today would be closer to $150 million, versus a market cap of about $782 million.

Cyclacel Pharmaceuticals Inc. (NASDAQ: CYCC) has a shelf filing that hit this week for up to $75 million, but the company has diluted over and over. Yahoo! Finance lists its market cap at only $44 million.

This already has sold and it is not an equity offering, but Dollar General Corp. (NYSE: DG) recently sold $1.3 billion in a combined offering of five-year and 10-year notes. This is after its debt rating was upgraded to investment grade, and the proceeds are to pay down debt (in short refinance). Dollar General did recently have a large insider sale in what should be the next to last insider sale offering ever.

Stay tuned. As the market remains strong, more companies will file to raise capital and more insiders and financial backers will continue to take profits.